Japan’s Finance Minister, Katsunobu Kato, addressed the Japanese parliament on Friday, firmly denying allegations from U.S. President Donald Trump that Japan manipulates the yen to benefit exporters. Kato’s comments come ahead of his planned visit to Washington next week, where he is expected to meet with U.S. Treasury Secretary Scott Bessent at the G20 finance leaders’ meeting and the spring International Monetary Fund (IMF) gatherings.
Kato took the opportunity to clarify Japan’s stance on currency policies, stating, “Japan does not manipulate the currency market to intentionally weaken the yen.” He emphasized that recent actions, such as yen-buying interventions, demonstrate Japan’s commitment to stabilizing the currency rather than deliberately devaluing it. This came in response to Trump’s previous criticism, which accused Japan of using a weak yen to gain an unfair trade advantage for its exporters.
The timing of Kato’s comments is critical, as Japan and the U.S. are set to engage in important bilateral talks regarding tariffs and trade. The currency issue, which has been a point of tension, is expected to feature prominently in discussions. Kato refrained from providing specific details about the upcoming meeting with Bessent but acknowledged that exchange rates would likely be a key topic in the broader trade negotiations.
The yen has recently gained strength, which many analysts attribute to market speculation that the U.S. may pressure Japan to join efforts to weaken the dollar and reduce the significant U.S. trade deficit. Trump, in March, suggested that he had told Japan and China’s leaders to halt further currency devaluation, labeling such moves as unfair to the U.S. economy.
The issue of exchange rates did not surface during the first round of trade talks between the U.S. and Japan on Wednesday. Ryosei Akazawa, Japan’s chief trade negotiator, stated that both sides agreed to defer the topic to finance ministers, based on a prior agreement between the two countries’ leaders. This sets the stage for next week’s potential face-to-face meeting between Kato and Bessent, marking the first high-level financial talks between the two since the trade discussions began.
Global policymakers are also preparing for the spring IMF meetings in Washington, set to run through April 26, which will bring together key figures to discuss the world’s economic outlook. As the U.S. pressures Japan on currency and trade matters, attention will also turn to the Bank of Japan’s (BOJ) monetary policies, especially given the ultra-low interest rates that have kept the yen weaker than it might otherwise be.
BOJ Governor Kazuo Ueda also spoke in parliament on Friday, avoiding direct comments on the yen’s level but reaffirming that the central bank will continue to adjust interest rates according to the economic outlook. “We will guide monetary policy appropriately from the standpoint of stably and sustainably achieving our 2% inflation target,” Ueda stated in response to a lawmaker’s question on whether the BOJ would raise rates in light of U.S. pressure. The BOJ is widely expected to maintain its current interest rate of 0.5% during its meeting at the end of April, while cutting its growth forecasts in response to global economic uncertainties.
As Japan faces mounting pressure from the U.S. on currency issues and trade tariffs, the coming days will be crucial in determining the future of economic relations between the two countries.
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